SCOTUS asks tough questions on hospitals’ Medicare claims lawsuit

The question of whether HHS had actively deceived anyone was not before the court, but several justices and Kneedler noted that a district judge only found that the agency did not use “the best data available” to calculate the DSH payments, not that it was deliberately trying to shortchange providers.

Even if it were the result of gross agency fraud, however, justices suggested that would not justify an open-ended appeals process.

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“The mere fact that a horrible [scenario] could occur does not at all dissuade me that an absolute rule” is illegal, Justice Antonin Scalia said.

Justice Stephen Breyer asked Roth what a reasonable deadline would be, if three years wasn’t enough. “Do you want to go back to the Civil War?”

Roth answered that “no time limit at all is the only reasonable solution.” But he also argued that there was a double standard in the agency’s “need for finality,” saying HHS can recover excess payments from providers however long ago they occurred, but providers don’t have that same leeway to recover underpayments made to them.

Roth asked the justices to send the case back to the district court, where he said it would be the hospitals’ burden to show that the agency had deliberately deceived providers on the DSH payments.

Kneedler faced tough questions, however, on whether the HHS secretary has the authority to grant the three-year “good cause” exception, when the Medicare statute provides only 180 days.

The court appointed John Manning, a Harvard Law School professor, to argue that the agency did not have the authority.

Kneedler defended the exception as an exercise of agency prerogative to which courts have long deferred, but he did not argue the point as strongly as he did the need for the absolute time limit.

“Whatever the answer to that question, the respondents in this case lose,” he said.

Problems with DSH payments had long been suspected, but in 2004, Congress passed a law requiring the agency to disclose the data used to calculate them, effectively eliminating the problem. But court cases continued.

After the district court ruling in 2008 found that the payments had in fact been poorly calculated, the Reimbursement Board decided that its hands were tied — it could not reopen the claims because they were beyond the deadline.

Last year, the U.S. District Court of Appeals overturned the board’s decision and sent it back to district court, but the government brought the case straight to the Supreme Court.